'Hangover Budget' Pleases Few


By Andrew MacLeod

Finance Minister Colin Hansen today presented a budget that shrinks the civil service and makes cuts across several ministries while keeping spending for health and education steady.

Hansen pitched it as a budget that would build on momentum from hosting the Olympics and would support children and families. Observers criticized it for abandoning earlier government priorities and failing to address the continued weakness in the economy -- more of a post-Olympics hangover budget than one picking up steam from the Games.

"It's very clear from this budget that B.C. faces a tentative recovery," said New Democratic Party leader Carole James. "I didn't see the government come forward with a strategy around jobs, a strategy around investing in people, putting resources that we need to in research and development, in post-secondary education in making sure we're providing for the people who are going to help us get through this economic recovery."

There will be 4,142 fewer people working for the government by 2013 than there were in 2008, according to the budget documents. That's a shrinking of 13 per cent, and at least some of the decrease will come from lay-offs.

As the document puts it, "Despite expected natural attrition, some involuntary staff reductions will likely be necessary in 2010/11 and 2011/12 to ensure government manages within annual budget targets and achieves a balanced budget by 2013/14."

The province has laid off 500 since September with another 1,000 to come over the next few years, a staff member told reporters on background, though Hansen later said it's impossible to put a figure on it. The "overwhelming majority" of staff reductions have been through attrition, he said. For people in jobs that are cut, he added, "We will work very hard to help them find another alternative position in the public service... Our goal is to keep the number of absolute layoffs to an absolute minimum."

Revenues down, spending up

The job cuts are part of the government's efforts to balance revenues and expenses by fiscal 2013-2014. The documents show a deficit of $1.715 billion in 2010-2011, which is consistent with what was projected in September.

While revenues have dropped off during the economic downturn, something frequently mentioned by Hansen and Premier Gordon Campbell, spending has continued to increase, though Hansen pointed out in his speech that it's not growing as fast as it was.

Even since the September budget update, corporate income tax is off by a further $252 million, natural gas royalties by $190 million and HST rebates have added another $227 million expense. On the plus side, the province is picking up $311 million more in transfers from the federal government and this fiscal year will include $395 million of the $1.6 billion in federal compensation for adopting the HST.

The documents also show that the province received $250 million of that compensation in 2009-2010, instead of the planned $750 million. The shift was because of the federal government's cash flow, said Hansen. "It's not something we have unilateral say over."

At the same time expenses have grown by $460 million, including a further $105 million for school districts, $31 million for post-secondary institutions and $34 million for health authorities and hospital societies.

The budget adds in $35 million to the LiveSmart program and $100 million for what the documents describe as clean energy initiatives.

Many missed opportunities

"This is a very confusing, unfocussed budget," said Michael Prince, a University of Victoria social policy professor. "There's just a real absence of looking at the most vulnerable," he said. "A real absence of social policy vision for the province."

The budget does little for communities outside the Lower Mainland that have suffered from the recession, said CUPE president Barry O'Neill. "There's no focus I think on the real resource communities."

B.C. Federation of Labour president Jim Sinclair criticized what he said was a clumsy attempt to sell the HST as a way to fund health care. "It's absurd. They really treat us like we're stupid," he said, noting the net impact of introducing the HST will be $113 million less in government coffers this year.

"At the end of the day, it's a transfer not from me to health care but from me to Teck Cominco that made record profits. That's the real transfer here," he said.

"It's not horrible," said Iglika Ivanova, an economist with the Canadian Centre for Policy Alternatives B.C. office. "There's nothing disastrous happening but it's not a reason go around celebrating."

While some arts and sports funding was reinstated, she said, "There are a lot of other groups who aren't getting anything."

There's no plan for rural economic development beyond drilling for gas, she said. And despite B.C. having the highest rate of child poverty in the country, there's no plan to address the issue, she said.

The Fraser Institute's senior economist Niels Veldhuis said the government needs to get its spending under control, especially in the health ministry. "Throwing more money at the problem won't solve the problem," he said. "This budget won't achieve what the minister wants it to achieve."

By 2013-2014 the government's debt will be as high as it ever was during the years the NDP was in power, he said.

Environmental contradictions

Tom Hackney from the B.C. Sustainable Energy Association said $30 million for LiveSmart won't go very far. "It's just not provincial in scale," he said. The government has good targets for greenhouse gas emissions, but he said, "It's time to start following through with some actions that will produce some serious results."

The government missed an opportunity to build the green economy, he said.

The Dogwood Initiative's Charles Campbell said the provincial government won't reach its climate change goals when its handing out $1.5 billion in subsidies to industries that are major greenhouse gas emitters. "You just can't ignore the contradiction," he said. "It's undermining our ability to build an economy of the future."

The premier has made fighting climate change a centre piece of past budgets and was quoted even on budget day in The Globe and Mail expressing his commitment to climate action.

"The environmental community was very optimistic a couple years ago," said Dogwood's Campbell. "We wanted to give him the benefit of the doubt but he's really proving us wrong."

"Thin gruel for the environment once again," said Gwen Barlee from the Wilderness Committee. In the past the government has provided the number of employees working in each ministry, but in this budget moved to only providing a government-wide number. Barlee said she suspects the environment ministry has taken a disproportional hit.

More money needs to be put into enforcing environmental regulations, said Andrew Gage, a staff lawyer for West Coast Environmental Law. "People die when air pollution laws are not enforced," he said. "Salmon runs disappear when you don't have environmental enforcement."

Not enough for health, education

Even advocates for the areas where the budget maintained funding, health and education, were critical.

"It's not enough to cover the costs that we're going to be seeing," said Rachel Tutte, co-chair of the B.C. Health Coalition. "It looks like further cuts to our health care system." Cutting preventative care in particular will have long term costs, she said.

"It's a no-news budget and that's not good news for British Columbians in terms of health care"" said Health Sciences Association of B.C. president Reid Johnson. "Health care is not discretionary spending. It's stuff that we need."

He traces the problem to cuts to federal transfer payments in the 1990s and the Campbell government's tax cuts fromt he time they took office in 2001. "If I was in government I wouldn't have slashed my sources of revenue," he said. "If I'm erradicating my sources of revenue, how am I going to pay for anything."

On the education side, Cindy Oliver, president of the Federation of Post-secondary Educators of B.C. said spending was flat. "I was really disappointed," she said, adding that a well-educated, skilled population is the foundation for a strong economy.

The Canadian Federation of Students' B.C. chair, Shamus Reid said cuts to student aid are misguided and the government now collects more money from tuition fees than from corporate taxes. "To me that illustrates how completely out of whack priorities are for this government."

The B.C. Teachers' Federation distributed a news release saying the small increase in money for education will also lead to cuts. While the government earmarked money for salary increases and full-day kindergarten, it said, it failed to increase funding for transportation, heating, and increases to MSP and pension costs.

Cuts to resource ministries

The budget also increases the forecast allowance for the year to $300 million. That's more than the $250 million previously planned and much more than the zero allocated in last February's pre-election budget, at a time of great economic volatility, but still much lower than the $750 million that was standard a few years ago.

Ministries receiving cuts include agriculture and lands, citizens' services, energy, mines and petroleum resources, finance, forests and range and labour. The healthy living and sport ministry also sees a cut, much of which appears to be the winding down of the 2010 Olympic and Paralympic Games secretariat.

The province will move $320 million from the resource ministries into health and education, Hansen said. Some of the savings in the resource ministries will come from consolidating some services, he said.

Hansen also released more details on the propety tax deferral for families announced in the throne speech three weeks ago. Starting in July, people who own at least 15 per cent of the equity in their home and who have children under 18 years old living at home will be able to defer their property taxes. The province will pay municipalities for the deferred taxes and will charge the home owner interest at the prime rate, he said.

The Housing and Social Development ministry's budget showed a decrease in spending on housing and employment programs, despite an increase in the amounts spent on disability and income assistance.

The Crown agency B.C. Housing, however, has seen its budget go up to $900 million from $627 million last year, with a provincial contribution four times what it was a few years ago.